Demystifying the Illusion of the Positive Effects of Ownership Concentration on Corporate Performance
Опубликовано на портале: 14-06-2006
Investment Management & Financial Innovations.
2005.
Vol. 2.
No. 4.
P. 50-68.
Тематические разделы:
Evidence supporting the relationship between ownership structure and corporate performance
has been rather contradictory. In this research, we investigate the effects of ownership
structure on business performance on a sample of 600 listed Canadian firms. We used
a three-phase analysis of variance in which each phase used a different definition
of ownership concentration: i) the overall concentration of the five largest shareholders
(CONC); ii) the holdings of the largest shareholder (BLC1); and iii) inside shareholders
as either managers or directors (BLCI). For each phase, we used cluster analysis
and three other concentration cutoff levels (an even-split into thirds, extreme quartiles,
and the Morck, Shleifer and Vishny (1988) cutoff) to verify if there is an optimal
level of concentration cutoff that may impact the performance. Our results indicate
a high level of ownership concentration in Canadian corporations. The Berle-Means
widely held corporation is far from universal. Besides, while state control of traded
firms is infrequent, family control is common. However, our findings indicate only
a weak association between performance measures and ownership concentration levels,
except for the return on investment, which shows some improvement with a high level
of ownership. Our results confirm those of Demsetz and Lehn (1985). Overall, no evidence
is found to support the efficient monitoring hypothesis, since performance cannot
be improved by blockholders who seem not only to be entrenched but may benefit from
perquisites and on-the-job consumption. This might indicate that large shareholders
expropriate minority absentee owners.
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